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Why bigger businesses need more than payment reminders to get paid faster

Why bigger businesses need more than payment reminders to get paid faster

Business owners looking to get paid faster are right to think about sending automated payment reminders. After all, payment reminders work. But as your business grows, your system of payment reminders needs to change. What worked for your small business with its handful of debtors won’t necessarily work as your accounts receivable (AR) function expands.

The fact is, not all automated payment reminder systems are created equal.

Smarter AR for better results


The goal of accounts receivable management is not to get good at issuing payment reminders. The goal is to get paid on time.

Inbuilt payment reminders in your accounting software allow you to generate more reminder activity. You can automatically send payment reminders, or even dunning letters. But then what? Are you confident that your debtor received your email? Can you be sure your debtor has everything they need to understand their debt? Did you get paid?

An effective payment reminder system not only delivers emails, it then feeds back valuable information so you can make better decisions, quickly. As your debtor activity grows, look for a system that provides the following:

  • A real-time map of your entire accounts receivable data so you can instantly see the overall debt owed to your business.
  • Account level detail including an audit trail of invoice and reminder communications.
  • Multi-channel delivery. Email reminders are useful but SMS, post and even fax still reach customers effectively.
  • Account-level communication. Your system should report and communicate about each debtor’s account, not just individual invoices. This way, you and your customers understand the total debt.

Map, track and remind about the entire AR ledger

See ezyCollect in action

One source of truth for teams


A common pain point in bigger businesses is keeping track of a growing list of debtors with multiple overdue invoices. You used to be able to rely on Karen in accounts to follow-up every overdue account. But when you have Karen, John and Amy on the job, your expanding team needs to share status reports with each other. That can be hard to do when everyone keeps separate notes, or worse, none at all.

When you have a team of people sending reminders and making phone calls to debtors it’s important to have one source of truth. You’ll need one consistent process and a central place where all debtor data and communication lives.

Think of your CRM. Just as your growing business may have upgraded to customer relationship management system for a complete view of customer relationships, your debtor management system should work as your debtor CRM. It becomes your go-to source of truth–an audit trail to track debtor activity. Your team will work faster once they eliminate multiple spreadsheets and call lists and work from one database that houses a complete history of payment reminders sent, phone calls made, promises of payments and next course of action.

Reminders become collectors


You know the power of a best practice invoice to help you get paid faster. But did you know that your payment reminders can also be optimised to boost your chances of making a collection?

Make a few simple tweaks to your basic payment reminders so they start collecting money for you:

  • Boost open rates by sending payment reminders from an email address from your business i.e. avoid the payment reminder that looks like it’s system generated from your accounting software; they are too easy to ignore.
  • Avoid sending one payment reminder per invoice. Instead, send payment reminders by account. This way, you don’t over-communicate with your debtor, you communicate about the total overdue, and you can spotlight the oldest overdue invoice (which becomes increasingly difficult to collect).
  • Add a Pay Now button. The most convenient payment method you can offer your debtor is the option to immediately click and pay with a credit card. A Pay Now button on your email or SMS reminder lets your debtor click through to a self-serve online checkout.

Professional communications


Every communication from your business – including payment reminders – is a reflection on your professionalism. As your business matures, so should the quality of your communications to customers. You’ll want your unique branding, tone and language evident in your payment reminders. Not only will your debtors instantly understand the communication is from your business, you will differentiate yourself from the thousands of companies sending generic payment reminders.

An escalating sequence


A key reason that big businesses are good at collections is their capacity to keep pursuing a debt until the customer pays up. As you grow, your payment reminder system should support your collection efforts with more services. ezyCollect, for example, is integrated with third party providers so you can add escalating actions to your workflow sequence.

For example, within ezyCollect you can instruct a debt collection agency to send a demand letter on your behalf, or even handle the entire debt collection for you. Because the system has an ecosystem of partners you can activate with the click of a button, your debt collection efforts never need to stall.

Automate an escalating sequence of follow-up activity

AR data for operational efficiency


When you’re running a mid-sized business, you’ll be taking a systems thinking approach to your operations. You’ll understand that business units impact each other and that information needs to flow between departments for operational efficiency.

Your accounts receivable function can collate valuable insights about your customers’ paying habits, use of credit and cashflow. However, without a system that delivers insights, you could be left operating in the dark. By unlocking the insights in your AR function, you can have more certainty around cashflow forecasting and credit control. Look for a system that deliver insights, not just data.

In summary:

  • Payment reminders work. They work better when they’re optimised to collect money for you.
  • Maintain a big picture view of your entire AR ledger.
  • Create one source of AR truth to facilitate team collaboration and visibility.
  • Your payment reminders are one part of an escalating sequence of cash recovery activities.
  • Use AR insights to improve operational and collection efficiency.

ezyCollect offers an end-to-end solution for complete accounts receivable management.

Collection call 101: Getting the results you want over the phone

Collection call 101: Getting the results you want over the phone

The collection call to an overdue customer may not be the favourite part of a credit controller’s job, but…it’s inevitable. Although it may be seemingly simple to pick up the phone and request payment, credit control phone calls require a great deal of strategy, tact, and empathy. Think of a time when you asked your employer for a pay rise. Did you walk into your manager’s office and demand the money? Probably not. Because that’s a surefire way to sound unreasonable and to generate a defensive response. Instead, you arrive prepared with facts, can pull out details and examples of how you’ve delivered, and you calmly communicate your expectations and intentions. You pick your timing. You have an honest conversation based on the positive relationship you’ve built over time. Similarly, your collection call draws on many of these skills. As superstar communicators, credit controllers are at the front line of building relationships with customers, communicating honestly, presenting the facts, listening, and negotiating for a positive outcome for everyone.

Do collection calls even work?

At ezyCollect, we can confirm that the collection call works! In fact, our users who add a phone call to their communication plan to overdue customers have great success in collecting payment immediately following a telephone call. Why? Because picking up the phone means avoiding the noise of your customer’s overloaded inbox. A phone call allows you to build a connection and most importantly, trust. That can be really tricky to do with text. Done right, credit control phone calls can result in prompt payment. Better still, the collection call is a prime opportunity to save a declining relationship with your buyer. We’ve heard the feedback from ezyCollect users, and we’ve listened to it all. So, we have developed a guide to nailing the collection call, and some examples of what to say when making a collection call. This way, you can get straight into the most effective way to get the payments you deserve with your first class telephone collection call skills!

Ensure that you speak to the right person in the business

First things first: In order to collect payment as efficiently as possible, ensure that you do your research and ask to speak with the right person in the business. That is the person who can take action to pay your invoices. This may be the business owner, the financial controller, or the external bookkeeper. Once on the line, introduce yourself by name and the company you are calling from. If you are leaving a message with someone in the business who has no function in accounts, don’t disclose that the call is about unpaid invoices. Simply request a call back by the end of the day.

Be empathetic

It’s important to connect with your overdue customer by sharing your understanding. Connection helps to build trust between you and your customer. It opens up an honest dialogue. Practising empathy also allows you to regulate your own emotions so you don’t unwittingly unravel a payments conversation by reacting in haste or anger. Below is an example telephone collection call script that demonstrates how to express empathy when a customer is having trouble meeting their payment terms.

An example telephone collection call script:

Scenario: The customer doesn’t have the cash on hand to pay the bill in full. Solution: Accept part payments over time. Customer: I don’t have the money this week. I’ll pay soon. You: I’m sorry to hear that. How’s business going? Customer: (Explains reasons for cashflow shortage.) You: Thank you for sharing that with me, I appreciate your honesty. It sounds like cashflow is tight. That’s tough to manage, we’re always trying to manage our cashflow, too. I’d love to keep you on as a customer; we’ve worked well together in the past. I think a payment arrangement would help us both. What do you think? Customer: What does that mean? You: It means we agree on part payments until the invoice is paid in full. That way we can both manage our cashflow better. Customer: OK, let’s do that. You: (Suggest your payment plan.) Thank you for committing to make those payments. I’m glad we could sort that out together. I’ll keep an eye for your first payment due tomorrow. (Note: In ezyCollect’s online customer payment portal, your customers with a good track record of paying on time will have the option to responsibly finance their debt with a third party finance provider.)

Be a problem solver

Problem solving is a large part, if not the main job, in a collection call. What this means is you’ll need to understand your business’ problem, and also your customer’s. Uncover problems by asking questions. Note that this is quite different from demanding answers! Once you’ve understood your customer’s problem with paying, your next job is to eliminate the problem. While not every problem is within your control, you’ll be surprised how many are. That’s why ezyCollect, for example, is designed to eliminate the common obstacles buyers experience when paying their suppliers. Many times, your own collections process is the problem. If you’re expecting a cheque, it’s too hard to pay you. If you don’t accept credit card payments, it’s too hard to pay you. If your customer must ring up your office to process a credit card payment, it’s too hard to pay you. Don’t panic, it’s not all bad. In fact, if your collections process is the problem, that’s good news because it means the solution is in your control. Below is an example telephone collection call script that demonstrates how to offer a solution when your buyer is having trouble transferring money to you.

A sample telephone collection call script:

Scenario: The customer is not in the office to complete payment. Solution: Add a Pay Now button to invoices so customers can complete payments online, from anywhere. Customer: I’m travelling and not at my desk. I’ll pay when I’m back in the office. You: You sound busy. Did you notice the Pay Now* button on our invoice? If you click that you can pay online with a credit card at any time. Customer: Okay. You: With that in mind, can you please let me know when you can complete the payment? I’ll keep an eye out for it. Customer: I’ll pay today. You: Thank you, I really appreciate that. I’ll make a note in our system that we spoke. And please send in your feedback about our online payments system. We implemented it to make payments easier for customers like you who don’t get a lot of desk time. I’d love to know how it works for you. Thanks and have a great day. (*With ezyCollect’s online payments, you can add Pay Now buttons on your invoices and reminders so customers can self-serve to click and pay online, 24/7.)

Key points:

A collections call may be a dreaded task in credit management but it shouldn’t be. In fact, when done with care and consideration, your collection call is a fantastic opportunity to build a better relationship with your customer, or to save a deteriorating relationship.
  • Your skills in listening, empathy and negotiation are crucial to executing a successful collection call.
  • Learn to be comfortable with silence, and listen deeply in order to pay attention to what is said and what is not said. Be mindful of your customer’s tone and language and listen with the intention to understand and solve the problem.
  • Negotiate for a win-win outcome. A good negotiator can express their position and reasoning clearly, seek a variety of solutions to the problem, collaborate not dominate, persuade not manipulate, act decisively, and reliably follow-through.
Improve your collections and communications workflow with accounts receivable automation from ezyCollect. Watch a free demo to see how it can help you.

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Overdue invoices? Templates for email and SMS reminders

Overdue invoices? Templates for email and SMS reminders

Research from ezyCollect shows that most overdue invoices are paid by the third reminder. That means the supplier must typically request payment two or three times before an invoice is paid. In the digital age, those reminders are usually sent by email and SMS.

With the right format, tone and timing your reminders for overdue invoices can be very powerful. Done well, your reminders become a great support tool for your customers’ payables team. Suppliers who use ezyCollect report back that their customers actually thank them for sending helpful payment reminders!

Remember, your reminder is a communication from your business and is great opportunity to represent your professionalism and enhance your customer relationship.

Our tips below will help your customers with overdue invoices to understand their debt and respond promptly to your requests for payment.

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The right way to write overdue invoice email reminders

Email continues to be both a universal and popular mode of communication to reach overdue customers. But simply sending an email doesn’t mean your customer will open it. While emails are relatively cheap—and automation makes the cost per email even cheaper—an ineffective email (or series of emails) is a waste of time and money.

Make it easier for your customer to respond to your emails:

  • Mobile optimise
    Today, more than half of all emails are read on mobile devices. 72 percent of people delete emails that don’t look good on mobiles; 22 per cent unsubscribe (2016 Adestra Consumer Adoption and Usage Study).
  • Personalise
    Your ‘from’ address and sign-off should include names your customer will recognise. Your salutation to your customer should also be personalised e.g. ‘Dear Sam, …’
  • Target
    Research the right person in your customer’s business to receive your reminder emails. Copy in their manager and your manager as  debtors reach your danger zone for default (in ezyCollect we call these Red Zone customers i.e. any business more than 60 days overdue).
  • Subject lines
    Brief is best. Use action words such ‘Please review’ or ‘Please action’. Tell your customer exactly what your email is about so they are compelled to open it. (Try testing different subject lines to see which ones get the best response rates.)
  • Oldest overdue invoice
    Rather than communicate individually about every invoice, communicate about the entire account. This means that you will consolidate all overdue invoices into each reminder and the oldest overdue invoice will be the priority (See our template below.)
  • Content
    Keep this concise. Use bullet points and short paragraphs. Marketing specialists, Hubspot, report “nothing boosts opens and clicks as well as an old school, plain-text email.”  i.e. choose plain text over HTML for your reminders.
  • Be polite
    Often your customer has simply overlooked your invoice. Don’t jeopardise your relationship unnecessarily by starting with harsh language. Reply to completed payments with a thank you email.
  • Include attachments
    Add the overdue invoice to your reminder email, or if there are many, consolidate them into one table in the body of the email and then add invoice copies as attachments.
  • Schedule a series of emails
    One reminder email may not be enough to generate a payment. Still, you don’t want to bombard your customer’s inbox daily. Plan a schedule of emails that will reach your customer over time. When intermixed with other modes of communication e.g. SMS reminders, more than one reminder is very effective. Subsequent emails should reference your agreed terms and conditions e.g. ‘As agreed in our terms and conditions, we will be placing your account on credit hold…’
  • Proofread
    Check spelling and grammar, tone, URL links, and make sure any default template copy is removed.
  • Reach every overdue customer
    If you’re issuing large numbers of invoices it’s almost impossible to reach every customer without significant labour investment, or automation. Still, customers can easily slip under the radar if you don’t follow-up on the invoices that become overdue.
  • Send on the right day
    If you know your customer’s payment schedule e.g. end of month, send your reminder email in time. Don’t send on a Friday if their office hours are Monday to Thursday.
  • Include clear calls to action
    Please pay immediately’ is pretty clear. Provide a name and number should your customer needs to contact someone in your business to discuss their overdue invoices.
  • Make it easy to action
    Add a Pay Now button—when this leads to your online payments portal, your customer is one click away from paying off their overdue invoices.

Template for overdue invoice reminder email

Subject: Reminder: Your account from <your company name> is overdue

Dear <Customer name>,

I hope you are well. A friendly reminder that our trading terms are <payment terms in days>.

Your oldest overdue invoice is now <number of days> days overdue.

The total amount overdue is <total amount overdue>. The table below summaries all overdues.

<table of overdue invoices>

I have attached invoice copies for your reference.

We would appreciate immediate payment.

We welcome your payment by the following methods:

<include all payment methods>

To pay via credit card, please click the Pay Now button below:

<Pay Now button>

Please contact us immediately for any queries about your account.

Kind regards,

<Contact name, email, phone number>

(Note: If using ezyCollect’s automated payment reminders, you can set up your email templates with drag and drop merge fields like ‘total amount overdue’, an ‘overdue invoice table’, and a ‘Pay Now’ button for online payments. The system collates all relevant information for you.)

Template for overdue invoice SMS reminder

Your SMS reminder will be much shorter than your email reminder. You have much less ‘real estate’ to work with!

  • Use SMS for bulletin or alert style messages.
  • Be brief and to the point.
  • No salutation required.
  • Keep characters to around 200.
  • Preview your message to ensure the reader doesn’t need to scroll too far.

 

Key points:

  • Credit managers rely on overdue invoice reminders to reign in late payments.
  • Your customers rely on your helpful reminders about overdue invoices.
  • Get the tone, content and format of your reminders right so you can generate a prompt payment or invite a payment discussion.
  • A best practice overdue reminder email or SMS template is a crucial tool in your business.

Improve your collections and communications workflow with accounts receivable automation from ezyCollect. Watch a free demo to see how it can help you.